Offering Legal, Tax & Business Services to Investment Managers & Hedge Funds Worldwide BVI Approved Managers
The BVI Approved Manager License & Compliance Since 2012, the BVI has offered a fund manager regime that supports the smaller and emerging fund manager. It has been a great success. In fact, many Cayman funds are set up with a BVI Approved Manager. In fact, the BVI Approved Manager out-performs the Cayman equivalent (i.e., the Cayman Islands Securities and Investment Business Law (SIBL) Exempted Manager), both with respect to cost (initial and ongoing) and because it has the stamp of being a regulated product, which the Cayman equivalent does not. Moreover, the BVI Approved Manager offers greater flexibility, as a Cayman Exempted Manager is limited to only acting for funds whose investors fall within the definitions of a “sophisticated investor” or “high net worth person” under SIBL. The BVI Approved Manager has no such limitation.
The Approved Investment Manager has three annual compliance obligations. The Approved Investment Manager files an Annual Return with the BVI Financial Services Commission (FSC) before January 31st. It pays an Annual License Fee of $1,500 to the BVI government by March 31. The Approved Investment Manager files a Financial Statement before June 30th (or six months after its financial year end) along with a Director's Certificate.
Developed as an alternative to the existing regime in which fund managers wishing to do business in the BVI must hold a full license under Part 1 of the Securities and Investment Business Act (SIBA), the Approved Manager law allows eligible fund managers and advisors to submit a simple application to the Financial Services Commission (FSC) and start business seven (7) days later (whereas a Part 1 license will typically take the FSC at least four (4) weeks to process).
The BVI he Approved Manager is regulated by the Financial Services Commission (FSC), its ongoing obligations are limited, which is one of its key attractions. It is required to submit an annual return and financial statements, but there is no requirement for the financial statements to be audited. In addition it must notify the FSC within 14 days if there are any changes to the information contained in its original license application.
An Approved Manager can act as the investment manager or investment advisor to any number of private or professional funds recognized under SIBA as well as any number of closed-ended funds domiciled in the BVI which have the key characteristics of a private or professional fund. The Approved Manager can also act for non-BVI feeder funds into BVI master funds. Although Approved Managers are not restricted to any material extent in the way they carry out business, the regime is crafted to be a ‘licensing regime’ rather than an entirely exempted activity.
An Approved Manager is subject to caps of (i) aggregate assets under management of US $400 million for open ended funds and (ii) aggregate capital commitments of US1 billion for closed ended funds. It can act as investment manager or investment adviser to one or more:
incubator, approved, private or professional fund recognized under the Securities and Investment Business Act, 2010 (SIBA);
closed ended funds domiciled in the BVI with certain characteristics of a private or professional fund;
fund (open or closed ended) domiciled in any Recognized Jurisdiction with certain characteristics of a private or professional fund;
fund (open or closed ended) investing a substantial part of their assets in a fund described in (a), (b) or (c) above; and
other person approved by the FSC on a case by case basis (we have seen this used most commonly for managed accounts).
The Approved Manager license is quick and easy to set up. An application must be submitted to the FSC and the following must be provided:
a copy of the applicant’s constitutional documents;
details of the directors or general partner, any senior officers, the individuals who carry out the day to day investment business functions of the applicant and any person to whom the applicant will delegate any of its investment business functions and a resume or curriculum vitae for each such person;
details of each person who owns or holds and interest in the applicant;
a written declaration by the applicant that each director, general partner, senior officer and person holding a “significant interest” (normally a ten per cent or greater interest) in the applicant is “fit and proper” in accordance with the meaning set out in the Regulatory Code;
a written declaration by the applicant’s authorized representative or legal practitioner that the application for approval as an approved manager is complete; and
the application fee of US$1,000.
The applicant can commence business seven days after submitting its application. An Approved Manager is required to have at least two directors, one of whom must be an individual. The BVI FSC is open to approving applicants where one has fairly limited investment management experienced. This means that the Approved Manager is a viable option for those just starting out in the business.
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